Tuesday, June 14, 2016

Wednesday Watch

Evening Headlines
Bloomberg:
 

  • Chinese Stocks Denied MSCI Entry in Blow to Xi’s Ambitions. China’s domestic equities were denied entry into MSCI Inc.’s benchmark indexes for a third time, a setback for President Xi Jinping’s efforts to raise the profile of mainland markets and turn the yuan into an international currency. The index compiler cited the need for additional improvements in the accessibility of the A-share market for the decision, according to a statement on Tuesday. MSCI, whose emerging-market index is tracked by investors with $1.5 trillion in assets, said it will reconsider inclusion in its 2017 market classification review, while not ruling out an earlier announcement. China was rejected despite a flurry of measures this year to address MSCI’s concerns, including curbs on arbitrary trading halts and looser restrictions on cross-border capital flows. The decision suggests international investors are still uncomfortable putting their money in the $6 trillion market after a botched government campaign to prop up share prices roiled global equities last year.
  • Yuan Declines to Five-Year Low as Concern Over Outflows Deepens. China’s yuan weakened to a five-year low, weighed down by signs of a slowing economy and concern that capital outflows may accelerate. The currency fell 0.19 percent to 6.5966 per dollar by the close on Tuesday in Shanghai, according to quotes from China Foreign Exchange Trading System. That’s the lowest for the yuan since February 2011 and extending its drop over the past month to 1 percent. The decline came before MSCI Inc. decided against including mainland shares in benchmark indexes. The offshore yuan weakened to as low as 6.6155 after the announcement, the lowest since February, before paring declines.
  • Republican Senators Lose Hope That Donald Trump Will Change. South Dakota Senator John Thune, the No. 3 Republican, said Trump's recent statements have been "concerning" and reflect his style throughout the campaign. "Everything he's said in the last couple of weeks has been concerning," Thune said. "I think the message has been conveyed from our members. And we're, I guess, hoping that he'll take it to heart." Then he rolled his eyes, admitting that strategy doesn't seem to be working "at the moment.
Wall Street Journal:
Fox News:
  • Federal prosecutors convene grand jury to investigate wife of Orlando massacre gunman, source says. (video) Federal prosecutors have convened a grand jury to investigate the wife of the Orlando nightclub shooter, seeking to charge her as an accessory to 49 counts of murder and 53 counts of attempted murder as well as with failure to notify law enforcement about the pending terrorist attack and lying to federal agents, a federal law enforcement source confirmed Tuesday to FoxNews.com.
CNBC:
  • One Kings Lane: From almost $1 billion to 'not material'. One Kings Lane, an online retailer, raised money in 2014 at a valuation of close to $1 billion. Now it hardly carries a price tag. Bed Bath & Beyond said Tuesday that it acquired One Kings Lane in an all-cash deal, and the purchase price was "not material."
Zero Hedge:
Business Insider: 
Night Trading 
  • Asian equity indices are -.5% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 149.5 +2.25 basis points. 
  • Asia Pacific Sovereign CDS Index 55.50 +1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 71.15 -.08%
  • S&P 500 futures +.01%. 
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (CTRP)/-.06
  • (JBL)/.15
  • (KFY)/.54
Economic Releases  
8:30 am EST
  • PPI Final Demand MoM for May is estimated to rise +.3% versus a +.2% gain in April.
  • PPI Ex Food and Energy MoM for May is estimated to rise +.1% versus a +.1% gain in April.
  • Empire Manufacturing for June is estimated to rise to -4.5 versus -9.02 in May.
9:15 am EST
  • Industrial Production MoM for May is estimated to fall -.2% versus a +.7% gain in April.
  • Capacity Utilization for May is estimated to fall to 75.2% versus 75.4% in April.
  • Manufacturing Production for May is estimated to fall -.1% versus a +.3% gain in April. 
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,127,780 barrels versus a -3,226,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -650,000 barrels versus a +1,010,000 increase the prior week. Distillate supplies are estimated to fall by -66,670 barrels versus a +1,754,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.41% versus a +1.1% gain prior.
2:00 pm EST
  • The FOMC is expected to keep the benchmark Fed Funds rate at .25%-.5%.
4:00 pm EST
  • Net Long-Term TIC Flows for April. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Yellen Press Conference, FOMC Policy Update/Economic Projections, BoJ rate decision, weekly MBA mortgage applications report and the (BLK) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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