Sunday, January 08, 2017

Monday Watch

Today's Headlines
Bloomberg:
  • China Reserves Slumped $320 Billion Last Year as Yuan Tumbled. China’s foreign currency holdings fell for a sixth month in December, bringing last year’s drop to $320 billion as the yuan posted its steepest annual slide in more than two decades. Reserves decreased $41.1 billion to a fresh five-year low of $3.01 trillion, the People’s Bank of China said Saturday. That was in line with estimates in Bloomberg’s survey of economists. The central bank’s effort to stabilize the yuan was the main reason for the drop last year, the State Administration of Foreign Exchange said in a statement. The world’s largest stockpile has fallen for 10 straight quarters from a record $4 trillion in June 2014, while eroding confidence in the yuan has pushed the currency to the lowest levels in eight years.
  • Asia Stocks Set to Follow U.S. Gains, Pound Slips. Futures showed most Asian equity markets strengthening after U.S. stocks rose to a record high at the end of last week, while Britain’s pound fell following comments by Prime Minister Theresa May on the U.K.’s European Union negotiations. The greenback held firm against most major peers in Asian trading Monday after signs of strength in the monthly U.S. labor market report helped drive up the Bloomberg Dollar Index on Friday for the first time in three days. Australian and New Zealand bond rates climbed following an increase in U.S. yields at the end of last week. West Texas Intermediate crude oil slid for the first time in four sessions. Markets in Japan are closed for a holiday. Nikkei 225 Index futures added 1 percent in Osaka, while Kospi index contracts rose 0.2 percent in latest trading. FTSE China A50 futures held steady and Hang Seng futures were off 0.2 percent.
  • Potential Fed Chairs Suggest They Would Pursue Tighter Policy. Potential candidates to head the Federal Reserve in 2018 suggested that monetary policy would be tighter if they were in charge. Speaking at the annual American Economic Association meeting that ended Sunday, Glenn Hubbard of Columbia University, along with Stanford University’s John Taylor and Kevin Warsh, criticized the central bank for trying to do too much to help an economy struggling with problems that monetary policy can’t solve.
Wall Street Journal:
Zero Hedge:
Reuters:
  • Australia forecasts dramatic drop in iron ore prices through 2018. The Department of Industry, Innovation and Science forecasts iron ore to average $51.60 a ton this year and $46.70 in 2018, compared with current spot prices of around $80, double the price a year ago. The department predicted a price of $44.10 in 2016. The country's chief forecaster said the price rise is being caused by a temporary lift in Chinese steel production and run ups caused by speculative commodities trading in China that will not last.
Night Trading
  • Asian indices are -.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.25 +.25 basis point.
  • Asia Pacific Sovereign CDS Index 33.75 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 69.95 -.04%.
  • S&P 500 futures +.09%.
  • NASDAQ 100 futures +.13%.

Earnings of Note
Company/Estimate
  • (AYI)/2.18
  • (CMC)/.16
  • (GPN)/.84
  • (APOL)/.19
  • (CUDA)/.14
  • (WDFC)/.87
Economic Releases
3:00 pm EST
  • Consumer Credit for November is estimated to rise to $18.225B versus $16.018B in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Rosengren speaking, Fed's Lockhart speaking, China CPI report, Eurozone Industrial Production report, Eurozone Unemployment report and the JPMorgan Healthcare Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and industrial 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 week.

No comments: