Monday, September 19, 2016

Tuesday Watch

Posted by Gary .....at 9:47 PM
Evening Headlines
Bloomberg:
  • China’s Failing Property Curbs Risk Bubble That May Hurt Economy. China’s attempts to slow runaway home-price growth in major cities are showing little sign of success, stoking the threat of a housing bubble that could destabilize the economy. New home prices rose the most in six years in August, jumping 1.2 percent from July, according to Bloomberg calculations based on government data. Home prices rose in 64 of 70 cities tracked by the government, up from 51 the previous month. Shanghai prices surged a record 4.4 percent for a year-on-year gain of 31 percent, while Beijing’s climbed 24 percent from a year earlier.
  • Turkey’s Army Is Driving Deeper Into Syria as Latest Truce Frays. Behind their dirt embankments on the frontier with Syria, Turkish soldiers take refuge from the scorching sun in the shade of pine trees. A pile of shells sits beside them on the road, ready for action. The border they’re defending is effectively less of a border than it used to be, and the action is further away. That’s because Turkey’s army, since it crossed into Syria late last month to fight Islamic State and Kurdish militias, has driven the front line deep into the neighboring state. It now controls a 900 square-kilometer (350 square-mile) area inside Syria. And that’s just the start, judging by President Recep Tayyip Erdogan’s comments on Monday. 
  • After Another Loss at the Polls, Merkel's Political Future Is Unclear. Another week, another election defeat for Angela Merkel, and a familiar round of calls for the chancellor to acknowledge she’s to blame. Each successive blow at the hands of the anti-immigration Alternative for Germany party piles pressure on Merkel to admit that her refugee policy of the past 12 months is leading her Christian Democratic Union ever further into the electoral desert. So far she’s refusing to recant, leading to speculation she may not contest federal elections due in 2017. 
  • Australia Stock Market Reopens After Worst Outage Since 2011. Australian stock trading resumed Tuesday after a technical fault shut the nation’s largest exchange in the biggest challenge yet for the bourse operator’s new boss. Less than two months into Dominic Stevens’s tenure, the ASX Ltd. chief executive officer was forced to apologize for a hardware failure that saw the equity exchange open late and close early Monday in its worst such disruption in almost five years. ASX said the technical issue had been resolved, after brokerages and investors criticized the firm for not fixing the outage sooner or giving them more details on the malfunction.
  • Asian Stocks Little Changed as Traders Await Central Bank Moves. Asian stocks were little changed as Japanese shares swung between gains and losses ahead of this week’s key policy decisions from the Federal Reserve and the Bank of Japan. The MSCI Asia Pacific Index slipped less than 0.1 percent to 138.31 as of 9:16 a.m. in Tokyo. Japan’s Topix index rose 0.1 percent as Tokyo markets resumed following a holiday on Monday, with the yen trading at 101.87 against the dollar. Monetary policy uncertainty has helped reignite volatility in global markets over the past two weeks, with traders split over what action the BOJ will undertake in its review Wednesday. Bets on an interest-rate increase from the Fed this week remain around 20 percent even as U.S. inflation data for August rose more than projected.
  • Oil Halts Gains Amid Signs Rising Global Supply to Sustain Glut. Futures were little changed in New York after advancing 0.6 percent Monday. Nigeria’s output reached 1.75 million barrels a day and will keep rising after government outreach and a cease-fire with militants allowed some production to restart, Minister of State for Petroleum Emmanuel Kachikwu said. U.S. crude stockpiles probably increased by 3.13 million barrels last week, according to a Bloomberg survey before government data Wednesday.
  • What Steel Glut? India Defies World Losses With Output Expansion. At a time when a surplus is forcing steel mills to close around the world, India’s debt-laden producers are ramping up to supply more of the metal than ever. Steel Authority of India Ltd., Tata Steel Ltd. and JSW Steel Ltd. -- which all posted losses last year -- are targeting record output in 2016 and want to almost triple capacity over the next decade. They expect demand in the world’s third-largest producing country to grow at about quadruple the current rate as Prime Minister Narendra Modi embarks on huge investments in new railroads, highways and ports, including $44 billion pledged for this year.
Wall Street Journal:
  • Another Terror Weekend. Three attacks remind Americans of the clear and present danger.
  • N.Y. Bomb Suspect Ahmad Khan Rahami Captured; No Others Being Sought. Blast now termed ‘an act of terror’ by authorities.
  • Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets. There’s uncommon dissent in the ranks of the Federal Reserve’s primary dealers over the central bank’s interest-rate decision this week. Two of the Fed’s 23 preferred bond-trading partners -- Barclays Plc and BNP Paribas SA -- are betting against their peers and the bond market by forecasting officials will raise rates Wednesday. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show. Economists at both banks say traders have too steeply discounted officials’ intent to hike after the Fed has remained on hold for longer than expected.
Fox News:
  • Bomb suspect Rahami a deadbeat, hated America, says his daughter’s mother. (video) The man who police nabbed and shot Monday after a day-long dragnet in connection with a series of terror attacks in and around New York was a bad father who disliked America, hated gays and took long trips to his homeland of Afghanistan, according to the mother of his young daughter. Maria, whose full name is being withheld by FoxNews.com, said her high school sweetheart, Ahmad Khan Rahami, didn’t pay child support and often railed against American culture. The 26-year-old, who spoke after her grandmother called her for a reporter who produced his press credential and identified himself at the grandmother’s home in Elizabeth, said she had not seen Rahami in two years.
  • Aid convoy attacked as Syria calls cease-fire finished. (video) A U.N. humanitarian aid convoy inside Syria was hit by airstrikes, U.N. officials said, as the Syrian military declared on Monday that the week-long U.S.-Russian brokered cease-fire had failed.
Zero Hedge:
Business Insider:
Telegraph:
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 111.50 +1.75 basis points.
  • Asia Pacific Sovereign CDS Index 37.75 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 72.39 +.03%. 
  • S&P 500 futures +.18%. 
  • NASDAQ 100 futures +.19%.
Morning Preview Links

Earnings of Note
Company/Estimate 
  • (LEN)/.90
  • (ADBE)/.72
  • (CPRT)/.55
  • (FDX)/2.78
  • (KBH)/.39
Economic Releases
8:30 am EST
  • Housing Starts for August are estimated to fall to 1190K versus 1211K in July.
  • Building Permits for August are estimated to rise to 1165K versus 1152K in July.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The German PPI, Japan Trade Balance report, weekly US retail sales reports, Goldman Communacopia Conference, Johnson Rice Energy conference and the (RMBS) analyst day could also impact trading today.
BOTTOM LINE:  Asian indices are modestly higher, boosted by by industrial and consumer 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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