Wednesday, October 26, 2016

Thursday Watch

Evening Headlines
Bloomberg:
  • Curse of Asia Witching Hour Haunts Currencies After Pound Crash. In the global currency market, the darkest hour comes just as dawn is breaking in Asia. Between the New York close and the start of trading in Tokyo, foreign-exchange volumes dwindle to just 2 percent of peak turnover, according to Aite Group, a consultant in Boston. As a result, any transaction in that two-hour window will hit the market disproportionately hard.
  • Asia Shares Mixed Amid Earnings as Oil Holds Near Three-Week Low. Asian shares were mixed in early trading as investors assessed earnings reports from companies including Samsung Electronics Co. and Bank of China Ltd. following a pullback in oil prices and dollar gains. About the same number of shares rose as fell on the MSCI Asia Pacific Index, while U.S. and U.K. equity index futures declined. The MSCI Asia Pacific Index was down 0.2 percent as of 9:23 a.m. Tokyo time, headed for its lowest close in more than a week.
  • Oil Trades Near 3-Week Low as U.S. Gulf, East Coast Supply Rises. Oil traded near a three-week low below $50 a barrel as U.S. East and Gulf coast crude stockpiles rose along with production.
  • Recession Risk Is Rising, Deutsche’s Chief U.S. Economist Warns. Standard measures of the U.S. labor market look pretty good. The unemployment rate is low, and job growth has been steady. But one indicator is flashing signs of fragility. It's an important one, too: The Federal Reserve's Labor Market Conditions Index. After falling just three times from 2012 to 2015, the index has fallen every month of 2016 except for one, July. And in July the annual change in the LMCI, from July 2015, turned negative.
Night Trading 
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 112.25 -2.5 basis points. 
  • Asia Pacific Sovereign CDS Index 33.5 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.23 -.09%
  • S&P 500 futures -.12%
  • NASDAQ 100 futures -.09%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (AET)/2.03
  • (APD)/1.98
  • (ALXN)/1.17
  • (MO)/.81
  • (AMT)/1.31
  • (BWA)/.77
  • (BMY)/.65
  • (CELG)/1.48
  • (CBG)/.50
  • (CLF)/.19
  • (CME)/1.04
  • (CL)/.73
  • (COP)/-.69
  • (DOW)/.79
  • (F)/.21
  • (LLL)/1.82
  • (IP)/.93
  • (HCA)/1.42
  • (POT)/.08
  • (TWTR)/.09
  • (SUP)/.36
  • (SWK)/1.62
  • (SEE)/.69
  • (RTN)/1.64
  • (PX)/1.40
  • (UPS)/1.44
  • (AFL)/1.74
  • (GOOG)/8.61
  • (AMZN)/.81
  • (AMGN)/2.79
  • (BIDU)/1.11
  • (DECK)/1.19
  • (EXPE)/2.47
  • (LNKD)/.91
  • (MCK)/3.05
  • (OII)/.16
  • (WYNN)/.74
  • (YRCW)/.50
Economic Releases
8:30 am EST
  • Preliminary Durable Goods Orders for September are estimated unch. versus a +.1% gain in August.
  • Preliminary Durables Ex Transports for September are estimated to rise +.2% versus a -.2% decline in August.
  • Preliminary Cap Goods Orders Non-Defense Ex-Air for September are estimated to fall -.1% versus a +.9% gain in August. 
  • Initial Jobless Claims are estimated to fall to 255K versus 260K the prior week.
  • Continuing Claims are estimated to fall to 2052K versus 2057K prior.
10:00 am EST
  • Pending Home Sales MoM for September are estimated to rise +1.1% versus a -2.4% decline in August. 
11:00 am EST
  • Kansas City Fed Manufacturing Activity for October is estimated to fall to 3.0 versus 6.0 in September.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Japan's Core CPI report, $28B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by consumer and metals & mining 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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