Thursday, January 05, 2017

Friday Watch

Evening Headlines
  • China Ready to Step Up Scrutiny of U.S. Firms If Trump Starts Feud: Sources. China is prepared to step up its scrutiny of U.S. companies in the event President-elect Donald Trump takes punitive measures against Chinese goods and triggers a trade war between the world’s two biggest economies after he takes office, according to people familiar with the matter. The options include subjecting well-known U.S. companies or ones that have large Chinese operations to tax or antitrust probes, the people said, asking not to be identified because the matter isn’t public. Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of American products, according to the people.
  • China's Credit Wheel Has a Creaking Cog.
  • Japan Shares Drop While Dollar Maintains Declines: Markets Wrap. Japanese shares fell after the dollar sank as the reflation trades sparked by Donald Trump’s election showed signs of faltering ahead of Friday’s U.S. jobs report. The Topix index lost 0.5 percent. The greenback held losses for a third day after reaching a 14-year high, as China moved to stem capital outflows and investors reconsidered Federal Reserve intentions. U.S. stocks recovered from session lows to end little changed. The yield on 10-year Treasury notes slid below its level prior to the Fed’s December interest-rate increase, while emerging-market shares erased post-election losses. The offshore yuan surged and gold traded near a four-week high on Thursday. Samsung Electronics Co. shares climbed in Seoul after profit beat estimates. The MSCI Asia Pacific Index slipped 0.2 percent as of 9:45 a.m. in Tokyo. Australia’s S&P/ASX 200 Index added 0.1 percent and New Zealand’s benchmark gauge fell less than 0.1 percent. South Korea’s Kospi advanced 0.4 percent as Samsung climbed.
  • Will OPEC Deliver Promised Output Cuts? Here’s How We’ll Know. The promise of production cuts from OPEC and its partners sent oil rallying in 2016. Now traders want proof they’re delivering on those vows. It won’t come easy. The challenge: Building a coherent picture from the morass of data that emerges at each step along the process, from the wellheads where the oil is produced, to the tankers that carry it, and the depots that store it.
  • U.S. Claims Thousands of D-Link Users Exposed to Hacking. A U.S. consumer protection watchdog sued a Taiwan-based maker of home-networking equipment over claims that lax security left its products vulnerable to hackers. The Federal Trade Commission alleged that D-Link Corp. and a U.S. unit failed to secure their routers and web cameras, exposing thousands of American consumers to targeted online security breaches. Products with inadequate safeguards allowed attackers to “monitor a consumer’s whereabouts in order to target them for theft or other crimes," according to the complaint filed Thursday in San Francisco federal court.
Wall Street Journal:
Zero Hedge:
Busines Insider:
Boersen Zeitung:
  • Pimco's Fels Worried About Future of Euro Zone. Pimco managing director and global economic adviser Joachim Fels said in an interview he is deeply concerned about the situation in euro area and cohesion of the monetary union. Euro zone more vulnerable to crises. No longer sure if political will to maintain the community under any circumstances is available everywhere.
Economic Information Daily:
  • China Should Curb Capital Flows in 'Hot' Cities. China should curb capital flows in "hot" cities to control property prices, a front-page commentary says. Banks should reduce financial support to high-priced property projects, according to the commentary. China should prevent capital flows to property sector via "structured leverage tools," the commentary said.
Night Trading 
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.0 -2.25 basis points.
  • Asia Pacific Sovereign CDS Index 33.25 -1.75 basis points.
  • Bloomberg Emerging Markets Currency Index 70.21 -.09%
  • S&P 500 futures +.01%. 
  • NASDAQ 100 futures +.03%.
Morning Preview Links

Earnings of Note

  • (ANGO)/.16
  • (AZZ)/.87
  • (GBX)/.83
Economic Releases
8:30 am EST
  • The Trade Deficit for November is estimated at -$45.4B versus -$42.6B in October.
  • The Change in Non-Farm Payrolls for December is estimated at 175K versus 178K in November.
  • The Unemployment Rate for December is estimated to rise to 4.7% versus 4.6% in November.
  • Average Hourly Earnings for December MoM is estimated to rise +.3% versus a -.1% decline in November. 
10:00 am EST
  • Factory Orders for November are estimated to fall -2.3% versus a +2.7% gain in October.
  • Final Durable Goods Orders for November are estimated to fall -4.6% versus a prior estimate of a -4.6% decline. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Evans speaking, Fed's Lacker speaking, Fed's Kaplan speaking and the German Factory Orders report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.

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