Wednesday, November 30, 2016

Thursday Watch

Evening Headlines
  • China Slaps 10% Tax on Ferrari, Bentley Cars to Curb Luxury. China is slapping a 10 percent tax on cars like the Ferrari GTC4Lusso, Bentley Bentayga and Aston Martin DB9 in a bid to combat conspicuous consumption and promote more fuel-efficient vehicles. Buyers of autos costing 1.3 million yuan ($189,000) or more will be hit with the tax starting Thursday, according to the Ministry of Finance. The levy on “super luxury” vehicles is meant to “guide reasonable consumption,” lower emissions and save energy, the ministry said in a statement on its website.
  • China Risks Stagnation, Ex-Goldman Dealmaker Says. China risks economic stagnation unless it quickly removes barriers hampering entrepreneurs seeking to enter industries from health care to education to financial services. That’s according to Fred Hu, a former Greater China chairman for Goldman Sachs Group Inc. who has advised the central government on financial, pension and state-enterprise reforms. "Economic reforms have been slow-paced, way short of expectations," said Hu, founder and chairman of Beijing-based investment firm Primavera Capital Group. "China should discard outdated regulations and policies that have hampered new business formation. Unfortunately doing so means taking power away from over-extending government agencies and bureaucrats. Right now, the bureaucracy just has no appetite to undertake such reforms."
  • China Factory Gauge Matches Post-2012 High as Large Firms Lead. China’s official factory gauge matched a post-2012 high as a credit-fueled recovery of smokestack industries gained momentum and signaled a pickup in inflation expectations.
  • Is the Emerging-Market Bond Selloff Out of Control? (video)
  • Asian Stocks Rise on Oil Deal, Dollar Gains as Bond Rout Deepens. Asian equities rallied as a deal to cut global oil output fueled gains in energy shares, while evidence of strength in the U.S. economy sank bonds and supported the dollar. The MSCI Asia Pacific Index added .8% as of 10:57 am Tokyo time, ending a two-day decline as a sub-gauge of energy stocks jumped 4.3%. 
  • Texas Shale Is Big Winner as OPEC Deal Brightens Oil Outlook. (video) Hangover Awaits as OPEC Celebrates Its Biggest Accord in Years. Let OPEC celebrate. For now. The oil club is dizzy with its own success after a harmonious meeting in Vienna, where it surprised the world by agreeing to its first production cut in eight years. Oil prices up 10 percent? Check. Saudi Arabia and Iran in agreement? Check. OPEC and Russia working together? Check. After being left for dead, OPEC pulled it off once again.
  • From IndyMac to OneWest: Steven Mnuchin's Big Score. (March 2012) Wall Street veteran Steven Mnuchin rode into Pasadena and bought what was left of IndyMac. Now he’s making a killing. 
Wall Street Journal:
  • Steven Mnuchin’s Defining Moment: Seizing Opportunity From the Financial Crisis. Donald Trump’s nominee for Treasury secretary made millions buying failed IndyMac and has résumé at odds with president-elect’s campaign rhetoric.
  • Schumer Deflects Blame To IndyMac, Regulator. (July 2008) Sen. Charles Schumer, hit with criticism from a federal regulator that he contributed to the failure of IndyMac Bank, said he may have caused some depositors to withdraw their money but said he wasn't responsible for the bank's downfall. The saga started in late June, when Sen. Schumer's letters to the FHFB, OTS and the Federal Deposit Insurance Corp. rang alarms that IndyMac "could face failure if prescriptive measures are not taken quickly." He noted the thrift's falling stock price, climbing delinquency rate and recent downgrading by analysts. Sen. Schumer's office publicized the letter June 27, providing it to The Wall Street Journal and other publications. A June 28 story in IndyMac's hometown newspaper, the Pasadena Star-News, had a "very inflammatory headline," Sen. Schumer said. It read: "IndyMac appears close to collapse." The story in the California newspaper mentioned Sen. Schumer's letters, as well as a shareholder lawsuit and other signs of trouble at IndyMac. The newspaper didn't immediately respond to a request for comment. IndyMac on July 1, a Tuesday, said Mr. Schumer's statements caused "elevated customer inquiries and withdrawals" on June 27 and June 28, and that about $100 million had been withdrawn.
  • U.S. to Forgive at Least $108 Billion in Student Debt in Coming Years. GAO report offers first full cost estimate of debt-relief programs, berates Education Department over accounting methods.
  • Damascus Presses Offensive Against Aleppo Rebels. Syrian regime shelling killed at least 40 civilians in east Aleppo, opposition officials and activists said.
Zero Hedge
Night Trading 
  • Asian equity indices are +.5% to +1.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 125.0 -1.0 basis point.
  • Asia Pacific Sovereign CDS Index 41.5 -2.0 basis points.
  • Bloomberg Emerging Markets Currency Index 69.37 +.03%
  • S&P 500 futures +.08%
  • NASDAQ 100 futures +.18%.
Morning Preview Links

Earnings of Note

  • (CBK)/-.14
  • (DG)/.93
  • (DCI)/.35
  • (KR)/.41
  • (TD)/1.22
  • (LE)/-.06
  • (ISLE)/.19
  • (AMBA)/.94
  • (CENT)/.05
  • (GIII)/1.54
  • (SWHC)/.58
  • (ULTA)/1.37
  • (WDAY)/-.05
  • (ZUMZ)/.36
Economic Releases 
7:30 am EST
  • Challenger Job Cuts YoY for November.
8:30 am EST
  • Initial Jobless Claims for last week are estimated to rise to 253K versus 251K the prior week.
  • Continuing Claims are estimated to fall to 2033K versus 2043K prior.
9:45 am EST
  • Final Markit US Manufacturing PMI for November is estimated at 53.9 versus a prior estimate of 53.9.
10:00 am EST
  • Construction Spending MoM for October is estimated to rise +.6% versus a -.4% decline in September.
  • ISM Manufacturing for November is estimated to rise to 52.4 versus 51.9 in October.
  • ISM Prices Paid for November is estimated at 54.5 versus 54.5 in October. 
  • Total Vehicle Sales for November is estimated to fall to 17.7M versus 17.9M in October.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Mester speaking, Eurozone Unemployment Rate, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (CBG) Business Outlook Day, (F) November sales call, (SKX) Analyst Meeting, (URI) Analyst Day, (JEC) Analyst Day and the (LB) November sales report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and financial 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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