Thursday Watch

Evening Headlines

Bloomberg:

• China's Traders Brace for Tighter Liquidity. (video)
• China’s Rural Poor Bear the Brunt of the Nation’s Aging Crisis. 
• Yen Extends Gains as Stock Rally Fades After Fed: Markets Wrap. The yen extended gains and a stock rally fizzled as traders in Asia digested minutes from the Federal Reserve’s December meeting. Crude oil maintained an advance. Japan’s currency rose 0.5 percent against the dollar and the Bloomberg Dollar Index retreated for a second day. Equity indexes in Japan swung between gains and losses, while Australian shares advanced and South Korea’s Kospi index dropped. The S&P 500 Index rose a second day overnight and the greenback fell as the Fed minutes highlighted concerns about the impact of a strong currency on the new U.S. administration’s stimulatory economic policies. The MSCI Asia Pacific Index rose 0.6 percent as of 10 a.m. in Tokyo. The Topix index added 0.1 percent and Australia’s S&P/ASX 200 Index advanced 0.3 percent. South Korea’s Kospi index slid 0.1 percent and New Zealand’s S&P/NZX 50 Index lost 0.2 percent.

Wall Street Journal:

• Donald Trump Plans Revamp of Top U.S. Spy Agency. President-elect works with advisers on restructuring Office of the Director of National Intelligence.
• Clients Want Hedge Funds but Not Their Big Bets. Institutional investors discourage the high-stakes punts for which hedge funds became famous.

Fox News:

• 'Guccifer' casts doubt on Obama administration's Russia hacking claims.

CNBC:

• Iraq, OPEC’s 2nd biggest producer, may have hard time cutting oil production. (video)

Zero Hedge:

• Trump Is Working On A Plan To Restructure, Pare Back The CIA And America's Top Spy Agency.
• In Massive Blow To California Unions, A Second Court Rules That Pension Benefits Can Be Reduced.
• House Passes Bill To Undo Months Of Obama Regulations With Just One Vote.
• This "Rogue" Oil & Gas Nation Just Set A Slew Of Output Records. (graph)
• No Mr. Soros, America Needs Defending.
• What Happens Next? (graph)
• December Auto Sales Jump To Record 18.4 Million SAAR As Light Truck Sales Surge. (graph)
• Crude Confusion As Gasoline, Distillates See Biggest Inventory Build In A Year.
• Macy's(M), Kohl's(KSS) Crash After Reporting Abysmal Holiday Sales; Cut Guidance; Announce Mass Layoffs, Store Closures.
• Global Debt Hits 325% Of World GDP, Rises To Record $217 Trillion. (graph)
• Fed Fails To Deliver Dow 20k But Bitcoin Hits Record High. (graph)

Busines Insider:

• Sears(SHLD) is closing 150 stores — here's the full list.
• Amazon's(AMZN) rumored bid for American Apparel could solve its Trump problem in one master stroke.
• Mexico spooked by Trump's leverage in keeping jobs in the US after Ford's pivot.
• From commodities to Bitcoin, Chinese speculators are looking to escape the weakening yuan.
• Macy's(M) is closing 68 stores — here's where they will shut down. (video)

Bild:

• German Economists Want Exit From Loose EU Monetary Policy. Rising inflation rates in Germany and Europe prompt calls for change in ECB monetary policy, citing comments from German economists.

Night Trading 

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 116.25 -2.5 basis points.
• Asia Pacific Sovereign CDS Index 35.0 -.75 basis point.
• Bloomberg Emerging Markets Currency Index 69.87 +.15%. 
• S&P 500 futures -.04%. 
• NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (STZ)/1.71
• (MON)/-.02
• (SCHN)/-.04
• (WBA)/1.09
• (HELE)/1.89
• (PSMT)/.82

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for December.     

8:15 am EST:

• The ADP Employment Change for December is estimated to fall to 175K versus 216K in November.

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 260K versus 265K the prior week. 
• Continuing Claims are estimated to fall to 2051K versus 2102K prior. 

9:45 am EST

• Final Markit US Services PMI for December is estimated at 53.4 versus a prior estimate of 53.4.

10:00 am EST

• ISM Non-Manufacturing for December is estimated to fall to 56.8 versus 57.2 in November. 

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,712,890 barrels versus a +614,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,206,560 barrels versus a -1,593,000 barrel decline the prior week. Distillate inventories are estimated to rise by +349,560 barrels versus a -1,881,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.41% versus a -.5% decline prior. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The UK Services PMI report, Australia Trade balance report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Goldman Sachs Energy Conference, CES 2017 and the (LB) Dec. Sales report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.