Monday, August 15, 2016

Tuesday Watch

Evening Headlines
Bloomberg:
  • China's Fading Animal Spirits.The July wobble in China's economy -- like its multi-year slowdown -- has much to do with the waning "animal spirits" of Chinese businesses caused by an historic shift in housing. That's according to Chi Lo, greater China senior economist at BNP Paribas Investment Partners in Hong Kong. A property-led pick up in the first half lost momentum in July, suggesting the market is struggling to digest an overhang in supply of apartments.
  • China Large-Cap ETF Flashing Sell Signal After 16% Rally: Chart.
  • Mexico Probes Mass Kidnapping in Resort City of Puerto Vallarta. Mexican state prosecutors said they’re investigating a mass kidnapping at an upscale restaurant in the Pacific beach resort city of Puerto Vallarta early Monday morning. Ten to 12 men were taken just after 1 a.m. from the La Leche restaurant by five armed gunmen who arrived in a pair of trucks, state prosecutor Eduardo Almaguer said at a news conference, citing witnesses. Authorities found several abandoned vehicles at the restaurant which indicate the victims were probably from a criminal group, he said. Puerto Vallarta, an upscale resort town visited by millions of foreign tourists annually, is about 550 miles northwest of the country’s capital, Mexico City. Almaguer said state authorities are working with the army and navy to locate the victims and kidnappers and are assuring the safety of tourists in the city.
  • Hedge Funds Bet Dollar Will Lose More Ground Versus Yen: Chart. (video) Asian Stocks Climb to One-Year High as Commodity Producers Gain. Asian stocks climbed, trading at the highest level in a year, after U.S. shares regained records and a rally in crude futures bolstered commodity producers. The MSCI Asia Pacific Index rose 0.1 percent to 139.98 as of 9:05 a.m. in Tokyo. Japan’s Topix index increased 0.1 percent as the yen fluctuated against the dollar. Asian stocks have climbed 24 percent from their February low as lackluster data on the world’s biggest economies fuels speculation central banks will continue to support them with stimulus and loose monetary policy. The odds the Federal Reserve will raise rates this year remains below 50 percent.
  • Aetna(AET) Quits Most Obamacare Markets, Joining Other Major Insurers. Health insurer Aetna Inc. will stop selling individual Obamacare plans next year in 11 of the 15 states where it had been participating in the program, joining other major insurers who’ve pulled out of the government-run markets in the face of mounting losses. It will keep selling plans in Iowa, Delaware, Nebraska and Virginia, while exiting markets including Pennsylvania, Florida and Ohio
  • A $35 Billion Stock, an SEC Halt and Suspicions of Manipulation.
  • Praxair(PX) Jumps After WSJ Report of Talks to Combine With Linde.
Wall Street Journal:
  • U.S. Transfers 15 Guantanamo Bay Detainees. The United Arab Emirates accepts 15 prisoners under President Obama’s push to nearly empty Gitmo by January. The U.S. transferred 15 Guantanamo Bay detainees to the United Arab Emirates on Monday, the largest such movement yet in President Barack Obama’s push to remove most prisoners from the offshore prison before he leaves office in January.
  • Soros Doubles Down on Bet Against the S&P 500.
  • U.S. Said to Uncover Evidence of Criminal Acts in VW Probe. Justice Department hasn’t decided on specific charges; settlement talks under way with car maker. U.S. Justice Department investigators found evidence of criminal wrongdoing in Volkswagen AG’s diesel-emissions cheating, and are negotiating a settlement with the German auto maker expected to result in charges and significant financial penalties, said people familiar with the matter.
  • Trust in Business vs. Government. The public likes the private economy more than the politicians do.
Fox News:
  • Trump changes tone on NATO, vows to work with alliance to defeat ISIS. (video) Republican presidential nominee Donald Trump, in what was billed as a major foreign policy address, on Monday backed off past threats to withdraw from the NATO alliance -- saying that if he's elected, the U.S. will work with the 28-member bloc to defeat the Islamic State. During his speech in Youngstown, Ohio, Trump called for working "very closely with NATO," describing radical Islamic terrorism as the dominant global threat and one that must be confronted at all levels. In doing so, Trump acknowledged having previously described NATO as "obsolete" for not dealing adequately with terrorism. "Since my comments, they have changed their policy," Trump said, calling this apparent development "very, very good." 
  • Deadly storm system leaves La. in shambles, threatens new flooding in Illinois. (video) The deadly storm system that wreaked havoc on Louisiana, where more than 20,000 had to be rescued, is working its way into the Midwest, where officials are bracing for major flooding.
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -.25% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.25 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 43.75 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.72 unch
  • S&P 500 futures -.06%. 
  • NASDAQ 100 futures -.03%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (AAP)/2.11
  • (DKS)/.69
  • (HD)/1.97
  • (TJX)/.81
  • (CREE)/.20
  • (URBN)/.55
Economic Releases 
8:30 am EST
  • Housing Starts for July are estimated to fall to 1180K versus 1189K in June.
  • Building Permits for July are estimated to rise to 1160K versus 1153K in June.
  • The CPI MoM for July is estimated unch. versus a +.2% gain in June.
  • The CPI Ex Food and Energy MoM for July is estimated to rise +.2% versus a +.2% gain in June.      
  • Real Avg. Weekly Earnings YoY for July. 
9:15 am EST
  • Industrial Production MoM July is estimated to rise +.3% versus a +.6% gain in June.
  • Capacity Utilization for July is estimated to rise to 75.6% versus 75.4% in June.
  • Manufacturing Production for July is estimated to rise +.3% versus a +.4% gain in June.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Lockhart speaking, Germany ZEW Index, UK CPI report, weekly US retail sales report and the Wedbush Healthcare Conference could also impact trading today.
BOTTOM LINE:  Asian indices are slightly lower, weighed down by technology and commodity 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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