Thursday, March 09, 2017

Friday Watch

Evening Headlines
  • China's `Stable, Solid' Yuan Faces Five Key Threats This Year. Chinese policy makers made it clear this week that they don’t want any surprises when it comes to the yuan. Three-month implied volatility on the currency is the lowest among emerging markets, as capital controls quell demand for foreign exchange. While Premier Li Keqiang hinted at an increased tolerance for bigger yuan moves at the start of the National People’s Congress, officials are sticking to their mantra. Deputy governor Yi Gang said on three separate occasions the yuan is “stable,” and his colleague Pan Gongsheng emphasized the currency market is “solid.”
  • China Stock Bulls Turn Wary. Optimism over China’s economy has driven gains in the world’s second-largest equity market this year. But that budding recovery could also be investors’ undoing. Some money managers are turning cautious on Chinese shares on concern the economic rebound will gather enough momentum that the central bank has to tighten monetary policy further. While the People’s Bank of China has emphasized its neutral course in 2017 and steered clear of boosting benchmark interest rates so far, mainland markets have started to price in a “major hawkish shift” from the PBOC, according to Goldman Sachs Group Inc.
  • Yen Drops as Global Bond Rout Deepens Before Jobs. The Topix index climbed 0.8 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s S&P/NZX 50 Index added 0.2 percent. Futures on Hong Kong’s Hang Seng slid 0.2 percent.
Wall Street Journal:
Zero Hedge:
Business Insider: 
Night Trading 
  • Asian equity indices are -.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 98.5 +3.25 basis points.
  • Asia Pacific Sovereign CDS Index 28.50 +1.0 basis point
  • Bloomberg Emerging Markets Currency Index 70.53 +.03%
  • S&P 500 futures +.24%. 
  • NASDAQ 100 futures +.22%.
Morning Preview Links

Earnings of Note

  • (BKE)/.79
  • (CTRN)/.36
  • (HIBB)/.54
Economic Releases 
8:30 am EST
  • The Change in Non-Farm Payrolls for February is estimated at 200K versus 227K in January.
  • The Unemployment Rate for February is estimated to fall to 4.7% versus 4.8% in January.   
  • Average Hourly Earnings MoM for February is estimated to rise +.3% versus a +.1% gain in January. 
2:00 pm EST 
  • The Monthly Budget Deficit for February is estimated at -$190.0B versus $51.3B in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Money Supply report, (MRVL) investor day, (ON) analyst day and the (UTX) analyst meeting could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

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