Wednesday Watch

Evening Headlines

Bloomberg:

• Hong Kong-Shanghai Link Looks Lopsided as Outflows Jump: Chart.
• Asian Stocks Drop as Topix Shares Go Ex-Dividend, Oil Volatile. Asian stocks fell, pushed down by declines in Japanese shares and a weaker oil price as hopes of an output cut fizzled. The MSCI Asia Pacific Index declined 0.5 percent to 141.33 as of 9:06 a.m. in Tokyo. The Topix index dropped 1.1 percent, the most in two-and-a-half weeks, as more than half the companies on the benchmark traded without the right to the next dividend. The yen was at 100.49 per dollar. Oil trading was volatile, with the price below $45 a barrel as investors scaled back expectations of a deal on output cuts when OPEC ministers meet later Wednesday.
• Bond Market in Deepest Central Bank-Induced Slumber Since 2014. (video) Concerns about a contentious U.S. presidential election and the health of Germany’s largest bank still aren’t enough to stir a Treasuries market emboldened by accommodative central banks. A measure of expected price swings in Treasuries sank to its lowest level since December 2014 as turmoil elsewhere in financial markets pushed investors into haven assets. Benchmark 10-year securities rallied for a second day after Monday’s U.S. presidential debate and as European stocks halted a two-day rout amid concern about Deutsche Bank AG’s financial footing.

Wall Street Journal:

• Donald Trump’s Blunt Defense of Business Record Poses Political Risks. Citing rough-and-tumble capitalism could appeal to some, repel others. Donald Trump jumped right in when Hillary Clinton accused him during Monday’s presidential debate of rooting for the housing market to collapse a decade ago so he could profit off an eventual rebound.
• Wells Fargo(WFC) Claws Back Millions From CEO After Scandal. CEO John Stumpf to forfeit $41 million in unvested equity awards, forgo salary during investigation; former retail banking head Carrie Tolstedt to forfeit $19 million in unvested equity awards. 
• Two Years Into Oil Slump, U.S. Shale Firms Are Ready to Pump More. Shale industry has proved resilient despite low prices thanks to cost cuts, efficiency improvements.

Fox News:

• Trump: Campaign has raised nearly $18 million since debate. (video)

CNBC:

• This is where oil could go if OPEC goes home empty-handed.
• OPEC is shooting itself in the foot, oil expert says. (video)

Zero Hedge:

• SocGen Explains The Recent Surge In Health Care Costs.
• Billionaire Capital Turns Into Ghost Town: "Home Contracts Down 80%", Trophy-Cars Pile Up In Showrooms.
• Bridgewater Calculates How Much Time Central Banks Have Left. (graph)
• US Bonds, Stocks Rally As Most Systemically Dangerous Bank In The World Collapses. (graph)
• Deutsche Bank(DB) Explains Why Central Banks Are Stuck.
• WA Goes After Pre-Crime: Gun Confiscation Proposed For Those "Likely To Commit Violence In The Near Future".
• The FT Goes Full Fearmonger: Electing Trump "Would Unravel The World".
• Oil Pops After Crude Inventories Unexpectedly Drop. (graph)
• Deutsche Bank Fears Spark Buying Panic In Bunds (Despite Rising Germany Sovereign Risk). (graph)
• $356 Billion Fund Manager: "Now Is The Most Treacherous Time Ever. I've Never Seen This In My Career".
• Why Did Cheryl Mills Require Criminal Immunity?
• Bond-Stock Correlation Reaches Record High. (graph)

Business Insider:

• The maker of TempurPedic(TPX) mattresses is crashing by more than 25%.
• No one is buying Deutsche Bank's 'comfortable' story.
• Nike(NKE) beat on earnings, but an important measure of future sales whiffed.

Night Trading 

• Asian equity indices are -1.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 115.25 -7.25 basis points. 
• Asia Pacific Sovereign CDS Index 32.25 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 73.09 -.03%. 
• S&P 500 futures -.21%. 
• NASDAQ 100 futures -.19%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (ATU)/.30
• (BBRY)/-.05
• (PAYX)/.57
• (WOR)/.77
• (PIR)/-.06

Economic Releases
8:30 am EST

• Preliminary Durable Goods Orders for August are estimated to fall -1.5% versus a +4.4% gain in July. 
• Preliminary Durables Ex Transports for August are estimated to fall -.5% versus a +1.3% gain in July.
• Preliminary Cap Goods Orders Non-Defense Ex Air for August are estimated to fall -.1% versus a +1.5% gain in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,307,500 barrels versus a -6,200,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -612,500 barrels versus a -3,204,000 barrel decline the prior week. Distillate inventories are estimated to rise by +760,630 barrels versus a +2,238,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.49% versus a -.9% decline the prior week.  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Kashkari speaking, Fed's Bullard speaking, Fed's Mester speaking, Fed's George speaking, OPEC Meeting Day 3, Japan Retail Sales report, $28B 7Y T-Note auction, weekly MBA mortgage applications report, (MCO) investor day and the (CHS) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial 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.