Monday, November 07, 2016

Tuesday Watch

Evening Headlines
Bloomberg:
  • China's Investors Get Creative About Capital Controls. China’s policy makers are playing catch-up as investors get more creative in evading capital controls. The authorities are taking a series of steps to plug loopholes, such as a potential plan to curb transactions that use the bitcoin digital currency to take funds out of the country, as well as a statement from UnionPay Co. limiting mainlanders from using its cards to buy insurance in Hong Kong. These add to more traditional measures, including an order seen as asking mainland banks to reduce foreign-exchange sales.
  • China Reserves Drop the Most Since January. (video) As anyone who has visited Japan knows, cash is still king. Even though many places now take credit cards, Apple Pay and other forms of cashless technology, the actual amount of notes and coins circulating in the country has doubled in 20 years. And that’s while the economy and population has shrunk.
  • Hong Kong Banks' Double Trouble.
  • Anxiety in Manila as Duterte Blasts U.S., Embraces China.
  • Cash Is Still King in Japan, and That Could Be a Problem for the BOJ. Preference for yen could limit scope for negative rate cuts.
  • Whoever Wins the Election, the Yen Looks Set for Gains. The yen is looking like a long-term winner after the Nov. 8 U.S. presidential vote, following a protectionism-heavy election campaign that’s roiled markets worldwide and spurred the currency toward its best year since the 2008 global financial crisis. Options traders have become more bullish on the yen as the election nears, while hedge funds wagered since early January that the currency will gain. JPMorgan Chase & Co. and HSBC Holdings Plc say that neither Democrat Hillary Clinton or Republican Donald Trump will favor a stronger dollar, so any short-term fluctuations in the yen as the vote nears are likely to give way to gains for the Japanese currency over the longer term. An expected Federal Reserve rate increase also may already be priced in.  
  • Asian Stocks Gain With Mexican Peso as U.S. Election Day Dawns. The MSCI Asia Pacific Index added 0.3 percent as of 9:21 a.m. Tokyo time, led by gains in raw-materials producers. Benchmarks in Australia, Japan and South Korea rose 0.3 percent, while New Zealand’s S&P/NZX 50 Index gained 0.8 percent.
Wall Street Journal:
Zero Hedge:
Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.25 -1.25 basis points. 
  • Asia Pacific Sovereign CDS Index 35.25 -1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 72.22 unch
  • S&P 500 futures -.21%
  • NASDAQ 100 futures -.24%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (CVS)/1.57
  • (DHI)/.77
  • (EXPD)/.65
  • (JCI)/.95
  • (VRX)/1.76
  • (JAZZ)/2.61
Economic Releases
6:00 am EST
  • The NFIB Small Business Optimism Index for October is estimated at 94.1 versus 94.1 in September.    
10:00 am EST
  • JOLTS Job Openings for September are estimated to rise to 5488 versus 5443 in August.
Upcoming Splits 
  • (MNST) 3-for-1
Other Potential Market Movers
  • The US Presidential Election, Fed's Evans speaking, German Trade Balance report, China CPI report, China Trade Balance report, weekly US retail sales reports, $24B 3Y Note auction and the Stephens Investor Conference could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to strengthen into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

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