Sunday, November 20, 2016

Monday Watch

Today's Headlines
  • Merkel Tells Her CDU Party She’ll Run Again as Chancellor. Angela Merkel told senior members of her Christian Democratic Union that she’ll run again as party leader and seek a fourth term as German chancellor, ending months of speculation over her political future. The chancellor revealed her decision to a meeting of the CDU’s executive board in Berlin on Sunday, according to three people who were present. She said that by seeking re-election she wants to provide stability and direction in difficult times, one of the people said. All asked not to be named because an announcement has yet to be made public. Merkel is due to brief reporters at 7 p.m. local time.
  • Negative Rates Are Failing to Halt Savings Obsession in Europe. After years of turbo-driven central bank stimulus, most Europeans still want to leave their spare cash in savings accounts, even if those accounts pay zero interest. That’s the finding of a survey by Europe’s biggest debt collector, Stockholm-based Intrum Justitia AB. “After the financial crisis, people have felt a need -- even if they have small means -- to create some kind of security,” Chief Executive Officer Mikael Ericson said in an interview in Stockholm on Nov. 16. “It can’t be that people save in a bank account because of the fantastic returns, so it must be about a sense of security, having money in the bank.”
  • Currency Vigilantes Ready to Strike Again as Italian Vote Looms. Italy’s constitutional referendum is giving the newly empowered currency vigilantes their latest chance to pounce. Investors see the euro, not Italian bonds, as the best way to express concern that Prime Minister Matteo Renzi’s reforms will become the latest victim of a rising populist mood. While both assets have fallen in the run-up to the Dec. 4 vote, traders are speculating that the European Central Bank could backstop bonds in the event of a “no” result -- supporting debt markets but further undermining the single currency.
  • Japan Imports Continue Decline, Exports Fall More Than Forecast. Japan posted a trade surplus for a second straight month in October, according to data released by the Ministry of Finance on Monday. The surplus was driven by a continued decline in the value of imports, which have fallen faster than exports.
  • Asian Stocks Outside Tokyo Slip Amid Dollar’s Rally; Crude Jumps. Stocks outside of Japan retreated in Asia as the dollar cemented its ascendancy, with traders all but convinced the Federal Reserve will pull the trigger on a rate hike in December. Oil jumped. Consumer and mining stocks drove declines from Australia to South Korea, while the yen’s drop to an almost six-month low bolstered Japanese exporters, helping the Topix index to an eighth straight day of gains. Australia’s currency extended its retreat with the Bloomberg Dollar Spot Index at its strongest point since January. U.S. crude rose more than 0.9 percent with Brent after Russian President Vladimir Putin expressed optimism over a deal to freeze output. The MSCI Asia Pacific excluding Japan Index fell 0.1 percent as of 9:27 a.m., declining for a second day as Australia’s S&P/ASX 200 Index slipped 0.4 percent. The Kospi index was down 0.3 percent in Seoul, while New Zealand’s S&P/NZX 50 Index dropped 0.2 percent.
  • Oil Bets Are the Biggest in 9 Years Amid OPEC, Trump Volatility. Money managers, producers and consumers made the biggest bets on West Texas Intermediate crude prices in nine years, amid signals more volatility is coming. Global markets were roiled after Donald Trump’s election as U.S. president and as OPEC continued negotiations on a deal to cap output. The U.S. dollar climbed to the highest since January. A measure of oil volatility surged last week to a seven-month high, a sign that traders were anticipating bigger price swings.
  • Schumer Says He Can Block Trump’s Efforts to Repeal Dodd-Frank. Incoming Senate Minority Leader Chuck Schumer, drawing a line in the sand for the next administration, said he has the votes to stop President-elect Donald Trump from repealing the Dodd-Frank Act and “the rules we put in place to limit Wall Street.” Schumer predicted that the Senate’s Democratic minority would get help from Republicans in any such fight. “We have 60 votes to block him,” Schumer said in an interview on NBC’s “Meet the Press.”
  • Here Are Goldman Sachs'(GS) Top Trade Ideas for 2017. (video) Finding the winners from populism and reflation.
  • Symantec(SYMC) Said to Reach Deal to Buy LifeLock for $2.4 Billion.
  • Boral Buys Headwaters(HW) For $1.8 Billion in Infrastructure Bet.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 131.0 +3.5 basis points.
  • Asia Pacific Sovereign CDS Index 45.0 +1.25 basis points.
  • Bloomberg Emerging Markets Currency Index 69.21 -.01%.
  • S&P 500 futures +.01%.
  • NASDAQ 100 futures +.02%.

Earnings of Note
  • (CSIQ)/.26
  • (IGT)/.44
  • (TSN)/1.16
  • (BRCD)/.22
  • (CPRT)/.55
  • (JACK)/.88
  • (PANW)/.53
  • (SINA)/.36
  • (VIPS)/1.01
  • (WB)/.20
Economic Releases
8:30 am EST
  • The Chicago Fed National Activity Index for October is estimated to rise to -.05 versus -.14 in September.
Upcoming Splits
  • (USNA) 2-for-1
Other Potential Market Movers
  • The Fed's Fischer speaking, ECB's Draghi speaking and the $39B 2Y T-Note auction could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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 75% net long heading into the week.

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