Wednesday Watch

Evening Headlines

Bloomberg:

• Asian Shares Track U.S. Gains as Fed Hike Prospects Sink Bonds. Asian stocks extended their advance after U.S. benchmarks rose to new records, while bonds in the region pulled back amid bets the Federal Reserve is almost certain to boost interest rates next month. Mining companies led gains as shares from Australia to South Korea climbed, as copper maintained its climb following a surge in most industrial metals last session. While markets in Japan were closed Wednesday, the yen held on to its retreat, as some emerging-market currencies strengthened versus the dollar. Government debt reverted to losses, with odds on a Fed rate increase in December reaching 100 percent. U.S. oil rose above $48 a barrel. The MSCI Asia Pacific excluding Japan Index advanced 0.3 percent as of 10:08 a.m. Tokyo time, building on last session’s 1.1 percent jump as groups of materials shares and financial stocks gained at least 0.4 percent. Australia’s S&P/ASX 200 Index was up 0.7 percent, while New Zealand’s S&P/NZX 50 Index added 0.4 percent after falling 0.6 percent over the previous two sessions. The Kospi index gained 0.1 percent in Seoul amid below-average trading volumes.

• Saudi Arabia’s Sway in OPEC Limited by Resurgent Iraq and Iran. Saudi Arabia’s dominance of OPEC isn’t what it once was. Iraq and Iran, shaking off shackles of sanctions and war, have raised oil output to record highs and are asserting themselves within the Organization of Petroleum Exporting Countries. Together they produce more than 8 million barrels of oil a day, nearly a quarter of the oil pumped by the group, and both want to boost their output further.

• Trump Shifts Tone on Climate Change, Environmentalists Scoff. Donald Trump, who called climate change a hoax during his campaign and vowed to pull out of the Paris accord, now says global warming might be real after all. The Republican president-elect told the New York Times Tuesday that perhaps humans are to blame for the rising temperatures that are melting polar ice caps and have been linked to extreme weather around the world. “I think there is some connectivity. Some, something. It depends on how much,” Trump said, according to tweets from New York Times reporters. He’s keeping an “open mind” on the Paris climate accord.

• How Apple(AAPL) Lost China to Two Unknown Local Smartphone Makers. Two years ago, Oppo and Vivo couldn’t crack the top five in China’s smartphone market. Now they outrank everyone after elbowing Apple aside, thanks to people like Cheng Xiaoning. Cheng runs a thriving electronics store in the rural town of Miaoxia, tapping into her WeChat social media account to promote the brands that pay the biggest commission, and in her case that’s Oppo and Vivo. While such payments start at about 40 yuan ($6), they escalate for more expensive handsets and reach almost 200 yuan for Oppo’s high-end smartphones.

• Facebook(FB) Builds Censorship Tool But Is No Closer to Entering China.

• These Charts Show That Trump Is Bringing the 1990s Back to Markets.

Wall Street Journal:

• Donald Trump Raises Prospect of Keeping Ties to His Firms. Trump indicated he was unlikely to fully disentangle himself from his businesses, raising questions about conflicts of interest.

• Department Stores’ Big Sales Are Getting Smaller. Retailers push discounting to attract customers, but Coach, Kors, Le Creuset, others say enough!

• Wall Street Is Betting $2.1 Trillion That U.S. Rates Will Rise. Investors believe a Trump presidency will mean higher growth, higher inflation and higher interest rates.

• China Has Warned of Retaliation If U.S. Levies Tariffs, Commerce Secretary Says. Beijing’s response if President-elect Donald Trump follows through on pledge could harm economy, Penny Pritzker warns.

Fox News:

• Carson says Trump has offered him HUD secretary, other Cabinet posts. (video)

CNBC:

• How deficits could be the Trump agenda's No. 1 nemesis

Zero Hedge:

• Helicopter Money Has Arrived... And Nobody Noticed: Here's Why.

• In Which States Has Food-Stamp Use Increased The Most.

• Obama Legacy Already Crumbling As Federal Judge Blocks Overtime Rule.

• Conservatives "Betrayed" By Trump Decision To Kill Clinton Probe.

• Oil Slides After Bigger Than Expected Gasoline Build. (graph)

• Trump Said To Be Leaning To Romney As Secretary Of State Pick.

• Deutsche Bank Warns "The Plate-Spinning Era" Is Over.

• These Are The Top 50 Hedge Fund Long And Short Positions.

• "Stocks Have Priced In Nirvana Where Debt Doesn't Matter... Best Of Luck With That".

• Haven't We Done This Before?

• Dow Tops 19,000 As Small Caps Panic-Squeeze To Longest Winning Streak In 20 Years.

Business Insider:

• Speculation is mounting that Jony Ive has checked out at Apple(AAPL).

• Where all 14 OPEC members stand ahead of November's crucial meeting.

• Republicans could use this move to fast-track their legislative policies.

• New college professor 'watchlist' aims to expose professors who 'advance leftist propaganda'. A new website is asking students and others to “expose and document” professors who “discriminate against conservative students, promote anti-American values and advance leftist propaganda in the classroom.”

Economic Information Daily:

• Fed Rate Hike May Fuel Global Outflows. A U.S. dollar appreciation after a Fed rate hike may be a "nightmare" for some other countries, triggering capital outflows and possibly an economic crisis, a front-page commentary says. A dollar rise will also worsen a commodities slum and pose "serious challenges" to resource-exporting nations, the commentary penned by Liu Hong said.

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 125.5 -3.0 basis points. 

• Asia Pacific Sovereign CDS Index 43.25 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 69.53 -.02%. 

• S&P 500 futures +.10%. 

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (DE)/.39

• (TSL)/.21

• (CTRP)/.11

Economic Releases 
8:30 am EST

• Preliminary Durable Goods Orders for October are estimated to rise +1.7% versus a -.3% decline in September.

• Preliminary Durables Ex Transports for October are estimated to rise +.2% versus a +.1% gain in September.

• Preliminary Cap Goods Orders Non-Defense Ex-Air for October are estimated to rise +.3% versus a -1.3% decline in September.

• Initial Jobless Claims for last week are estimated to rise to 250K versus 235K the prior week.

• Continuing Claims are estimated to rise to 2014K versus 1977K prior.

9:00 am EST

• 3Q House Price Purchase Index.

• The FHFA House Price Index MoM for September is estimated to rise +.6% versus a +.7% gain in August. 

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for November is estimated to rise to 53.5 versus 53.4 in October. 

10:00 am EST

• New Home Sales for October are estimated to fall to 590K versus 593K in September.

• Final Univ. of Mich. Consumer Confidence is estimated at 91.6 versus a prior estimate of 91.6. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +518,700 barrels versus a +5,274,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +698,500 barrels versus a +746,000 barrel gain the prior week. Distillate inventories are estimated to fall by -163,500 barrels versus a +310,000 barrel gain prior. Finally, Refinery Utilization is estimated to rise by +.53% versus a +2.1% gain prior.

2:00 pm EST

• FOMC Meeting Minutes.
  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing & Services PMIs, weekly Bloomberg Consumer Comfort Index, $28B 7Y T-Note auction and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology 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 day.