Tuesday, December 13, 2016

Wednesday Watch

Evening Headlines
Bloomberg:
  • Dramatic Appeals for Civilian Lives as Syrian Forces Poise to Take Aleppo. (video) Syrian rebels reached a cease-fire deal to evacuate from eastern Aleppo in an effective surrender on Tuesday, as Russia declared all military action had stopped and the Syrian government had assumed control of the former rebel enclave. The dramatic developments, which appeared to restore the remainder of what was once Syria's largest city to President Bashar Assad's forces after months of heavy fighting and a crippling siege, followed reports of mass killings by government forces closing in on the final few blocks still held by the rebels. Individuals in Aleppo have tweeted what are being called "final messages" using the hashtag #SaveAleppo:
  • Japan Corporate Sentiment Rises for 1st Time in Six Quarters. (video) Sentiment among large manufacturers rose to 10 from 6 three months ago (est.10), according to the Tankan survey released by the Bank of Japan Wednesday.
  • Even Car Sales Have Been Hit by India’s Chaotic Cash Clampdown. Industrywide demand for passenger vehicles in India will be depressed for a few months after Prime Minister Narendra Modi’s unprecedented cash clampdown, according to senior executives at Tata Motors Ltd. and Honda Motor Co. The cash crunch after scrapping of old high-denomination banknotes has hurt consumer sentiment and is expected to continue through March, Mayank Pareek, president of passenger vehicle business at Tata Motors, said in an interview. Customers who have deferred purchases may come back in a few months depending on the economy, Jnaneswar Sen, senior vice president at Honda’s India auto unit, said without elaborating.
  • Asia Stocks Rise to 1-Month High as Fed Day Dawns; Dollar Steady. A gauge of Asian shares rose toward a one-month high and Chinese index futures signaled gains after both the S&P 500 Index and the Dow Jones Industrial Average rocketed to new records. With bets on a U.S. rate increase Wednesday wedged at 100 percent, the dollar held in position versus major peers, while ceding ground to the Korean won and the Malaysian ringgit. Government bonds maintained their advance as Treasuries continued to range trade. U.S. crude fell from a 17-month high before an update on inventories. Copper fell as rising stockpiles take the sheen off industrial metals. Consumer stocks and utilities pushed the MSCI Asia Pacific Index up .2% as of 9:57 am Tokyo time, headed for its highest close since Nov. 1, even as Japan's Topix fluctuated, holding around its highest level this year.
Wall Street Journal:
Zero Hedge:
Business Insider:
New York Times:
Reuters:
  • Gundlach: U.S. 10-year Treasury yield above 3 percent will harm stocks, housing. A U.S. 10-year Treasury note yield above 3 percent will harm the stock-market rally and housing market, said Jeffrey Gundlach, chief executive of DoubleLine Capital, on Tuesday. "I think above 3 percent is a problem," Gundlach told Reuters. "If the 10-year goes above 3 percent, you would also have to say unequivocally you have seen the end of the bond bull market." On an investor webcast late Tuesday, Gundlach reiterated that U.S. President-elect Donald Trump's administration will be "bond unfriendly" and investors should brace for a 6 percent 10-year Treasury yield within four to five years.
Telegraph:
news.com.au: 
Night Trading 
  • Asian equity indices are -.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.75 -4.75 basis points.
  • Asia Pacific Sovereign CDS Index 36.25 unch.
  • Bloomberg Emerging Markets Currency Index 70.37 +.03%
  • S&P 500 futures -.07%. 
  • NASDAQ 100 futures +.02%.
Morning Preview Links

Earnings of Note
Company/Estimate 

  • (JOY)/.16
  • (PIR)/.13
  • (APOG)/.77
Economic Releases 
8:30 am EST
  • Advance Retail Sales MoM for November are estimated to rise +.3% versus a +.8% gain in October.
  • Retail Sales Ex Auto MoM for November are estimated to rise +.4% versus a +.8% gain in October.
  • Retail Sales Ex Auto and Gas for November are estimated to rise +.4% versus a +.6% gain in October.
  • PPI Final Demand MoM for November is estimated to rise +.1% versus unch. in October.
  • PPI Ex Food and Energy MoM for November is estimated to rise .2% versus a -.2% decline in October. 
9:15 am EST
  • Industrial Production MoM for November is estimated to fall -.3% versus unch. in October.
  • Manufacturing Production for November is estimated to fall -.2% versus a +.2% gain in October.
  • Capacity Utilization for November is estimated to fall to 75.1% versus 75.3% in October. 
10:00 am EST
  • Business Inventories for October are estimated to fall by -.1% versus a +.1% gain in September.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,354,360 barrels versus a -2,389,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,901,090 barrels versus a +3,425,000 barrel gain the prior week. Distillate supplies are estimated to rise by +988,550 barrels versus a +2,501,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.46% versus a +.6% gain prior.
2:00 pm EST
  • The FOMC is expected to raise the benchmark Fed Funds rate from .25-.5% to .5-.75%.
  • FOMC Summary of Economic projections. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, Eurozone Industrial Production report, Australian Unemployment report, OPEC Monthly Update, weekly MBA Mortgage Applications Report, BMO Healthcare Conference, (GE) Outlook Meeting and the (UTX) Outlook Conference Call could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by consumer and utility shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

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