Tuesday, September 20, 2016

Tuesday Watch

Evening Headlines
Bloomberg: 
  • Why China's Experiment in Direct Democracy Was Doomed to Fail. Five years ago Wednesday, the tiny fishing enclave of Wukan drew international attention after villagers rose up in a land dispute, eventually securing a landmark localelection in China. It has since become a cautionary tale for the nation’s democratic reformers. The village about 150 kilometers (90 miles) northeast Hong Kong erupted anew this month, as protesters returned to the streets to challenge the graft conviction of one of the last remaining leaders elected after the 2011 uprising. Videos circulated on social media showed riot police clashing with brick-throwing demonstrators and raiding the homes of alleged organizers. Authorities said Sept. 13 that they had detained at least 13 villagers over their suspected role in the protests.
  • The Battle for China's Smartphone Market. (video)
  • Japanese Exports Decline for an 11th Straight Month in August. Japan’s poor exports performance continued in August, with shipments falling for for 11th straight month as the strong yen and tepid global economy undercut demand.
  • Asian Stocks Are Little Changed, Await Japan Policy Decision. Asian stocks were little changed as investors braced for policy statements Wednesday from the Bank of Japan and the Federal Reserve. The MSCI Asia Pacific Index gained less than 0.1 percent to 138.72 as of 9:02 a.m. in Tokyo. Global markets have oscillated amid an uptick in volatility the past two weeks, with concern mounting that central banks are becoming less committed to stimulus amid persistently mixed economic data. Traders are split over what action the BOJ will take in its review Wednesday in Tokyo, while bets on an interest-rate increase from the Fed remain around 22 percent, from over 40 percent in late August.
  • iPhone 7 Teardown Shows Margins Slimming on Storage, Displays. Apple Inc.’s iPhone margins have narrowed with the release of its latest smartphone line, the iPhone 7, with higher costs to provide greater storage options, a glossy black cover and more advanced displays, according to an analysis by IHS Inc. The component analysis firm estimates that the total manufacturing cost of an entry-level iPhone 7, a model with a 4.7-inch screen and 32 GB of storage, is $224.80. This compares with an updated IHS estimate of $200 for an entry-level iPhone 6S in 2015. IHS didn’t perform an analysis of the larger iPhone 7 Plus but said the costs are likely higher than last year’s iPhone 6S Plus due to the presence of additional components.
Wall Street Journal:
Zero Hedge: 
Business Insider:
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 121.75 +10.25 basis points. (new series)
  • Asia Pacific Sovereign CDS Index 31.75 -6.0 basis points.
  • Bloomberg Emerging Markets Currency Index 72.39 +.02%
  • S&P 500 futures +.04%
  • NASDAQ 100 futures +.07%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (KMX)/.88
  • (GIS)/.75
  • (ALOG)/1.17
  • (BBBY)/1.16
  • (FUL)/.67
  • (MLHR)/.62
  • (JBL)/.25
  • (RHT)/.54
  • (SCS)/.32 
Economic Releases
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,361,110 barrels versus a -559,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,300,000 barrels versus a +567,000 barrel gain the prior week. Distillate inventories are estimated to rise by +38,890 barrels versus a +4,619,000 barrel gain the prior week. 
2:00 pm EST
  • The FOMC is expected to leave the benchmark Fed Funds rate at .25%-.5%.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, FOMC Policy Update & Economic projections, BoJ rate decision, weekly MBA mortgage applications report, (YRCW) analyst day, (INTU) investor day and the (AMAT) analyst day could also impact trading today.
BOTTOM LINE:  Asian indices are slightly higher, boosted by by commodity and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

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