Wednesday, January 11, 2017

Thursday Watch

Evening Headlines
  • China’s Great Ball of Money Has More Bubbles in Sight for 2017. Call it China’s Great Ball of Money, Whac-a-Mole Finance, or simply a whole lot of liquidity. Whatever term you use for the excess credit trapped in China’s financial system, few would deny that predicting its sometimes erratic movements can be a money-maker for analysts, traders and investors. After a string of market bubbles in recent years, China will again see assets threatened in 2017 by prices detaching from fundamentals. That’s the opinion of all but one of 14 economists surveyed by Bloomberg late last month. Half penciled in the risk of a real-estate bubble inflating, despite efforts by policy makers in recent months to avoid exactly that outcome. An additional four saw the corporate bond market as most vulnerable to becoming a bubble, again even as officials take steps to raise costs and reduce a build-up in debt.
  • In Surprise Rate Cut, Brazil Signals New Pace of Easing Ahead. (video)
  • India's Economy Faces a Bumpy Road to Recovery. India's Economy Faces a Bumpy Road to Recovery. India’s economy is set for a choppy recovery from the world’s most sweeping currency policy change in decades. Inflation continued to slow in December as the cash ban squelched demand while a volatile factory output gauge rose in November, according to Bloomberg surveys before data due at 5:30 p.m. in New Delhi on Thursday. Companies are bracing for lower sales and employment and bond-market swings are at the highest level since 2013.
  • Yen Gains, Japan Stocks Drop After Trump Comments: Markets Wrap. The yen strengthened for a fourth day and Japanese stocks retreated after Donald Trump’s first press conference since his election victory gave scant detail on policy. Oil maintained gains and currencies of commodity-producing nations climbed. Japan’s currency headed toward 115 per dollar as the greenback held on to Wednesday’s losses. Asia’s regional equity index advanced for a fourth day, poised for the highest closing level since October. The Aussie climbe
    d and the country’s equity market nudged higher. Oil held on to gains after a government report showed U.S. refiners processed a record amount of crude last week. The MSCI Asia Pacific Index rose 0.5 percent as of 9:25 a.m. in Tokyo.
  • Goldman Sachs’s(GS) Dina Powell Said to Join Trump Administration. Goldman Sachs Group Inc.’s Dina Powell, head of the firm’s philanthropic efforts, is poised to be named to a role in Donald Trump’s administration, according to people with knowledge of the matter.
Wall Street Journal:
Zero Hedge:
Busines Insider:
Night Trading 
  • Asian equity indices are -.50% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.5 +.25 basis point.
  • Asia Pacific Sovereign CDS Index 34.5 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 69.58 +.01%
  • S&P 500 futures -.13%. 
  • NASDAQ 100 futures -.15%.
Morning Preview Links

Earnings of Note

  • (DAL)/.82
  • (FCEL)/-.35
  • (SJR)/.31
  • (TSM)/3.71
Economic Releases
8:30 am EST
  • The Import Price Index MoM for December is estimated to rise +.7% versus a -.3% decline in November
  • Initial Jobless Claims for last week are estimated to rise to 255K versus 235K the prior week.
  • Continuing Claims are estimated to fall to 2084K versus 2112K prior. 
2:00 pm EST
  • The Monthly Budget Deficit for December is estimated at -$26.0B versus -$136.7B in November.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, Fed's Harker speaking, Fed's Evans speaking, Fed's Bullard speaking, WASDE Crop report, $12B 30Y T-Bond auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (SPLK) analyst meeting, (KMX) analyst day and the (MNST) investor meeting could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

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