Tuesday, November 01, 2016

Wednesday Watch

Evening Headlines
Bloomberg:
  • China Is Losing Its Emerging Markets Growth Engine. China’s export growth to emerging markets that helped it weather the global financial crisis has fallen away, adding to the drag on manufacturers as demand from advanced economies fails to pick up the slack. Exports to developing nations fell 6 percent in the second quarter while those to fuel-exporting countries in the Middle East and beyond flat-lined after a 22 percent plunge in the first three months. Weaker oil and commodities prices were the main causes along with the war in Syria that’s undercut demand across the Middle East, according to exporters and foreign buyers interviewed last week at the biennial Canton Fair in Guangzhou.
  • Fastest-Growing China Provinces Can’t Quit Investment Addiction. When it comes to China’s economy, investment is still king. In the five fastest-growing provinces, total fixed-asset investment exceeded the sum of their gross domestic product in the first three quarters of this year, according to new data from 29 of 31 provincial governments. In Chongqing, Guizhou, Tianjin, Jiangxi and Anhui, combined total investment was 6.56 trillion yuan ($969 billion) versus their combined economic output of 6.37 trillion yuan, the data show. 
  • Asian Stocks Decline on U.S. Election Angst as Yen Strengthens. Asian stocks fell with U.S. equity index futures amid mounting anxiety ahead of next week’s American presidential election. The yen strengthened, while the Swiss franc and gold maintained gains from the last session as investors favored haven assets. The MSCI Asia Pacific Index sank toward a two-week low after the S&P 500 Index sank to its lowest since July. The yen was near a one-week high following the steepest surge in more than two months for the Swiss franc, while gold traded close to its highest price since the start of October and Australian government debt advanced. U.S. crude fell for a fourth day, ahead of an update on American stockpiles. New Zealand’s dollar appreciated after strong jobs data damped prospects of further interest-rate cuts in the nation. The MSCI Asia Pacific Index declined 0.6 percent as of 9:16 a.m. Tokyo time, led by losses in consumer discretionary shares. Japan’s Topix index dropped 1.4 percent, the biggest decline among regional markets open for trading. 
  • Microsoft: Windows Flaw Used By Hackers Linked to Russians.
Wall Street Journal:
  • Iraqi Forces Enter Islamic State Stronghold of Mosul. Gunfire is heard in a neighborhood inside the Islamic State-held city. Iraqi security forces entered Mosul on Tuesday, with the crackle of gunfire in densely populated neighborhoods signaling a dangerous new stage of urban combat for control of the Islamic State-held city.
Fox News:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -1.25% to -.5 % on average.
  • Asia Ex-Japan Investment Grade CDS Index 117.75 +4.5 basis points. 
  • Asia Pacific Sovereign CDS Index 35.75 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.14 -.08%
  • S&P 500 futures -.05%
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (ENR)/.50
  • (VIAB)/.65
  • (WEN)/.10
  • (MT)/.18
  • (UHAL)/8.58
  • (FLO)/.21
  • (NTES)/3.20
  • (SHAK)/.14
Economic Releases
8:15 am EST
  • The ADP Employment Change for October is estimated to rise to 165K versus 154K in September.
9:45 am EST
  • ISM New York for October.   
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,580,910 barrels versus a -553,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,005,450 barrels versus a -1,956,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,754,910 barrels versus a -3,354,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.49% versus a +.6% gain prior.
2:00 pm EST
  • The FOMC is expected to leave the benchmark Fed Funds rate at .25-.5%.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Eurozone Manufacturing PMI, China Services PMI, weekly MBA Mortgage Applications report and the Goldman Industrials Conference could also impact trading today.
BOTTOM LINE:  Asian indices are lower, weighed down by commodity and technology 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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