Thursday Watch

Evening Headlines
Bloomberg: 

• Final Brexit Appeals Made as Polls Diverge on Referendum’s Eve. Brexit’s advocates and opponents made 11th-hour appeals to voters on the eve of the U.K.’s referendum on European Union membership, with opinion polls on the last day of campaigning suggesting the ballot could go either way. Three of four surveys published Wednesday depicted a contest that’s too close to call, with two percentage points or less separating the camps. A fourth poll showed a clear lead for Remain, which is also favored by Britain’s bookmakers. The pound, which has tended to slide when the Leave campaign showed signs of momentum, extended gains to reach its highest level this year against the dollar. With voting booths set to open at 7 a.m. on Thursday -- and with a record 46.5 million Britons registered to cast ballots -- the rivals in an often-vitriolic debate made their closing pitches.
• Brexit Watch Indicators. 
• Christie’s Auction in London Sinks on Eve of Brexit Referendum. It was a tough night for Christie’s. The auction house sold 25.6 million pounds ($37.8 million) of Impressionist and modern art on Wednesday in London, its smallest tally for a major evening sale in the category in more than a decade.
• Stealth China Stimulus Means Fiscal Gap Over 10%, Economists Say. China is stepping up stimulus by stealth in its efforts to ensure hitting the leadership’s growth target this year, with moves that will enhance the role of the state even as policy makers say they want a bigger role for the market. The fiscal deficit when taking off-budget spending into account will exceed 10 percent of gross domestic product this year -- more than triple the government’s stated ratio of 3 percent, according to economists at UBS Group AG and JPMorgan Chase & Co.
• Japan Negative Rates Drive Biggest Lenders From Overnight Market. A majority of Japan’s biggest private lenders are still unwilling to borrow from the market for overnight loans almost six months after the Bank of Japan announced its negative interest-rate policy. Three of Japan’s five largest lenders by market capitalization said they were not tapping the unsecured overnight call market for funding, according to a Bloomberg survey this month of Bank of Tokyo-Mitsubishi UFJ Ltd., Sumitomo Mitsui Banking Corp., Mizuho Bank Ltd., Sumitomo Mitsui Trust Holdings Inc. and Resona Holdings Inc. Two said they are raising funds from the market to maintain relationships with clients.
• Kim: North Korea Capable of Missile 'Attack' on U.S. Military in Pacific. North Korea said its launch Wednesday of an intermediate-range ballistic missile was successful, claiming the projectile is capable of hitting U.S. military operations in the Pacific.
• Currency Traders Face 3 a.m. Singapore Start for Brexit Results. As the U.K. decides on its future in or out of the European Union, currency traders and analysts thousands of miles away in Asia, will be at their desks well before dawn. Voting is scheduled to close at 10 p.m. in the U.K. on Thursday, or 5 a.m. in Singapore on Friday. Traders and analysts in the region’s biggest foreign-exchange center are bracing for potential turmoil in the 24-hour global foreign-exchange market as the bulk of the results are expected to be in by 10:30 a.m. in the Asian city. With the outcome too close to call based on the latest polls, they are preparing for global fallout should Britons vote to withdraw from the world’s largest trading bloc.UBS Group AG, the world’s third-biggest currency trader, will have a fully-staffed trading desk in Singapore by 5 a.m. on Friday as traders start work about an hour earlier than usual.
• Asian Stocks Advance as Investors Await Start of Brexit Voting. Asian stocks edged higher with voting due to start as Britons decide whether to stay in the European Union. The MSCI Asia Pacific Index gained 0.1 percent to 129.71 as of 9:02 a.m. in Tokyo. Three of four polls published Wednesday depicted a referendum that’s too close to call, with two percentage points or less separating the camps. Bookmakers’ odds imply a chance of about one-in-four of a vote to leave.“Markets seem to have almost entirely priced in a “Remain” vote win, meaning that the market moves and volatility around the vote may be far less than many had been expecting,” said Angus Nicholson, Melbourne-based analyst at IG Ltd.
• Obamacare Reprieve Won't Cure Biotech's Fear Factor.
• Bed Bath & Beyond(BBBY) Tumbles After Profit Misses Analyst Estimates. Bed Bath & Beyond Inc. fell as much as 7.1 percent in late trading after posting a surprise sales decline and disappointing earnings, a sign the home-products store is struggling to cope with online competition.

Wall Street Journal:

• Bank of America(BAC) Nearing SEC Settlement in Client-Accounts Probe. Regulator had been investigating if bank had proper controls for some customer accounts and retail-brokerage funds. Bank of America Corp. has been in discussions with U.S. regulators about paying $400 million to $450 million to settle allegations it violated rules designed to safeguard client accounts, according to people familiar with the matter.
• Elon Musk’s Subsidy Aggregation. The billionaire tries to integrate his taxpayer-backed business model. Elon Musk didn’t become a billionaire without brass, and this week he floated one of his most outrageous bets: an offer by his taxpayer-subsidized Tesla Motors to buy his taxpayer-subsidized SolarCity. Tesla shareholders and Wall Street analysts are howling, but didn’t they always know they were buying a business model that depended on the kindness of politicians?

Barron's:

• Red Hat(RHT) Drops 5% on In-Line FYQ1 Earnings, In-Line Forecast; Sets $1B Buyback Plan .

Fox News:

• Immigration boss who barred feds from terror suspect up for award, but agency won't say why. A U.S. immigration official blamed in a federal report for barring law enforcement agents from a suspect in the San Bernardino terror attack has been nominated for a prestigious agency award – but her bosses in Washington refuse to say what she did to earn consideration.

MarketWatch: 

• The reason everyone says Apple is a one-trick pony is because it is.

CNBC:

• Twilio prices IPO at $15 a share.
• Record buybacks fail to lift S&P 500. U.S. companies in the S&P 500 bought their own stock at a record pace the 12 months ending in March, new data show, but the buyback tidal wave did little to lift the stock market as the benchmark was actually down about 1 percent during the period. During the March 2015 to March 2016 period, U.S. companies spent a record $589.4 billion in share repurchases, according to figures released Wednesday by S&P Dow Jones Indices. That eclipsed the previous record of $589.1 billion set during the market peak in 2007. 
• Dow 11,500 is a matter of when, not if: Advisor. (video) The market is overvalued and it's only a matter of time before the Dow Jones industrial average drops to 11,500, one market expert said Wednesday. Stocks are being held up by confidence in the central banks' ability to solve every problem that can come up, Ken Moraif, a senior advisor at wealth management and investment firm Money Matters, said in an interview with "Closing Bell." If that confidence is shaken, he thinks the market will plunge.

Zero Hedge:

• Why The Just Released YouGov Poll May Have Sealed The Outcome Of The UK Referendum.
• This Is What Yellen Told Congress When Asked If The Fed Is Boosting The Stock Market.
• China Warns The US That It Is "The Wrong Opponent To Play Games With".
• China's Petro-State "Lender Of Last Resort" Conundrum.
• Pound Spikes After Two Latest Brexit Polls Show Remain In Lead, JPM Poll Finds "Small Lead For Remain".
• Hillary Clinton's IT Aide Pleads The Fifth Over 125 Times.
• IRS Admits To Illegally Seizing Bank Accounts; Agrees To Give The Money Back.
• "It's An Alice In Wonderland World" - GRI Warns "Debt Is Being Piled Upon Debt Being Piled Upon Debt".
• Hedges Soar, Markets Snore As Traders Brace For Big Brexit Day. (graph)

Business Insider:

• Wall Street is turning its back on Elon Musk.
• A controversial hedge fund has been raided by federal agents.
• Emails show key security features were disabled on Hillary Clinton's private server.

@Callum_Thomas:

• Global container throughput index - brexit or not, global trade is looking sick... (graph)

Reuters:

• Gundlach says considering selling European equities on 'Bremain' vote. Jeffrey Gundlach, the chief executive officer at DoubleLine Capital, said Wednesday that his firm is considering selling its position in European equities early Friday on a "Bremain" vote that keeps Britain in the European Union. Gundlach, who oversees $100 billion at the Los Angeles-based DoubleLine, also said the Tesla-SolarCity deal is "a complete confidence destroyer" for Tesla Motors Inc shareholders. Gundlach, whose DoubleLine purchased beaten-down European stocks a week ago, said in a telephone interview that the firm expects Britain to vote on Thursday to stay in the EU "so you want to sell on the pop. European stocks have been rising, so we are expecting one more push into the vote." Gundlach also chimed in on Tesla's proposed acquisition of SolarCity Corp, which Tesla's Chief Executive Officer Elon Musk called a "no-brainer." "This is a poor idea for Elon Musk," Gundlach said. "This is damaging to his reputation and to the way he operates."

Financial Times:

• US to hike duties on Chinese steel to over 500%.

Night Trading 

• Asian equity indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 139.25 -2.25 basis points 
• Asia Pacific Sovereign CDS Index 51.75 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 72.58 +.09%. 
• S&P 500 futures +.53%. 
• NASDAQ 100 futures +.52%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (ACN)/1.41
• (BBRY)/-.08
• (CMC)/.29
• (SONC)/.42

Economic Releases  
8:30 am EST

• The Chicago Fed Nat Activity Index for May is estimated to rise to .11 versus .1 in Arpil.
• Initial Jobless Claims for last week are estimated to fall to 270K versus 277K the prior week.
• Continuing Claims are estimated to fall to 2159K versus 2157K prior. 

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for June is estimated to rise to 50.9 versus 50.7 in May.

10:00 am EST

• New Home Sales for May are estimated to fall to 560K versus 619K in April.
• The Leading Index for May is estimated to rise +.1% versus a +.6% gain in April.    

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for June is estimated at -5 versus -5 in May.

Upcoming Splits 

• (SSNC) 2-for-1

Other Potential Market Movers

• The Brexit vote results, Fed's Kaplan speaking, Eurozone Manufacturing PMI report, weekly  (LUV) investor day, (EQIX) analyst day, (KR) general meeting and the (BKS) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.