Wednesday, December 28, 2016

Thursday Watch

Evening Headlines
Bloomberg:
  • China Fault Lines: Where Economic Turbulence Could Erupt in 2017. China’s balancing act isn’t getting any easier. Policy makers are grappling with how to attack excessive borrowing and rein in soaring property prices while maintaining rapid growth. They’re also battling yuan depreciation and capital outflow pressures as U.S. interest rates rise, while on the horizon looms the risk of confrontation with America’s President-elect Donald Trump on trade and Taiwan. It’s a high-wire act with the potential to produce shocks, like the one erupting in the bond market as tighter liquidity threatens financing for small companies. President Xi Jinping told top officials he’s open to growth below the 6.5 percent target to 2020 if it carries too much risk, a person familiar with the situation said last week. Leaders have pledged to reduce hazards for 2017.
  • S.Korea Government Cuts 2017 Growth Projection to 2.6% From 3%.
  • Asian Stocks Set to Follow U.S. Lower, Dollar Firm: Markets Wrap. Nikkei 225 index futures dropped 0.7 percent in Osaka and Singapore. MSCI Taiwan futures and futures on Korea’s Kospi 200 were 0.3 percent lower. FTSE China A50 futures were little changed.
Wall Street Journal:
Zero Hedge:
Night Trading 
  • Asian equity indices are -.75% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 121.25 +8.0 basis points.
  • Asia Pacific Sovereign CDS Index 37.75 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 69.55 +.04%
  • S&P 500 futures +.04%. 
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • None of note
Economic Releases
8:30 am EST
  • Advance Goods Trade Balance for November is estimated at -$61.6B versus -$61.9B in October.
  • Preliminary Wholesale Inventories MoM for November are estimated to rise +.2% versus a -.4% decline in October.
  • Initial Jobless Claims are estimated to fall to 265K versus 275K the prior week.
  • Continuing Claims are estimated to fall to 2027K versus 2036K prior.     
11:00 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,266,670 barrels versus a +2,256,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +155,560 barrels versus a -1,309,000 barrel decline the prior week. Distillate supplies are estimated to rise by +733,330 barrels versus a -2,420,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.25% versus a +1.0% gain prior. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The $28B 7Y T-Note auction, weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.
BOTTOM LINE:  Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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