Sunday, April 30, 2017

Monday Watch

Today's Headlines
  • China Manufacturing Gauge Declines From a Nearly Five-Year High. China’s official factory and services gauges pulled back from multi-year highs, dimming the outlook for the sustainability of the past two quarters’ acceleration in economic growth. Manufacturing purchasing managers index fell to 51.2 in April from an almost five-year high of 51.8 in March, missing the median estimate of 51.7 in a Bloomberg survey and falling short of all projections. Non-manufacturing PMI dropped to a six-month low of 54 from 55.1 last month. Gauges still show momentum, as numbers higher than 50 indicate improving conditions.
  • Macron Hunts for French Rural Votes, Le Pen Cheers New Ally. French presidential front-runner Emmanuel Macron hunted Saturday for votes in rural France where his far-right opponent, Marine Le Pen, is making inroads among country folk who feel left behind. Back in Paris, Le Pen announced that if she wins the presidency in the May 7 runoff she would name former rival Nicolas Dupont-Aignan, her new campaign ally, as her prime minister. The move aims to secure the nearly 1.7 million votes that the anti-European Union conservative got when he was eliminated from the presidential race in the first round of balloting.
  • Turkey Threatens Further Strikes on U.S.-allied Syrian Kurds. Turkish President Recep Tayyip Erdogan said Sunday his country may take further action against Kurdish militants in Iraq and Syria, as U.S.-backed forces in Syria closed in on the last neighborhoods of a former stronghold of the Islamic State group. The U.S. views the Kurdish-led Syrian Democratic Forces as the most effective partner to counter the Islamic State group in northern Syria, an assessment bolstered by the SDF's steady advances against the jihadists. But it has complicated relations with Turkey, which views the group's Kurdish component as an extension of a terror group operating inside its own borders.
  • Cautious Start for Stocks as Global Growth Wanes. The MSCI Asia Pacific Index was flat after capping a fourth straight month of gains. Stocks in Japan were little changed in light trading as China’s factory gauge fell more than expected from March’s almost five-year high. The yen recouped some of last week’s slide as investors weighed the possibility of escalating tension between the U.S. and North Korea. On top of all that, Congress will have this week to agree on a spending bill or risk a shutdown, after passing a stopgap measure Friday.
  • Libya's Oil Output Rebounds as Sharara, El Feel Fields Restarted. Libya’s crude production rebounded to more than 700,000 barrels a day as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after a halt. The Sharara field is currently producing 216,400 barrels a day, while the El Feel, or Elephant, deposit is pumping 26,500 and is expected to boost output further, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday by phone. Crude from Sharara started flowing to the Zawiya refinery after the port of Zawiya re-opened last week following a three-week closure. El Feel, idled since April 2015, also restarted last week.
  • Oil Price Optimism Wears Off as Texas Wildcatters Drill On. The relentless drilling ramp-up in America’s top shale plays is making investors more skeptical that an oil price rebound is on the horizon. After increasing their bets on rising West Texas Intermediate crude for three straight weeks, money managers slashed the wagers by 21 percent, according to U.S. Commodity Futures Trading Commission data. Producers in Texas are leading the longest shale revival since 2011, making OPEC-led efforts to rebalance the market increasingly difficult.
  • What Trump’s Done—or Undone—for Business in 100 Days.
  • Fox, Blackstone Said Teaming to Make Competing Tribune Bid. Twenty-First Century Fox Inc. is teaming with Blackstone Group LP to make an offer to acquire TV-station owner Tribune Media Co., rivaling a planned bid by Sinclair Broadcast Group Inc., people familiar with the situation said. The all-cash bid would be funded by Blackstone while Fox would contribute its TV stations to the joint venture that would acquire Tribune, said one of the people, who declined to be identified because the talks are private. The two sides are in talks about a deal ahead of a deadline this week for final bids. No agreement has yet been reached.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are unch. to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 94.50 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 22.25 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.29 unch.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures +.03%.

Earnings of Note
  • (AMG)/3.18
  • (AWI)/.56
  • (CAH)/1.45
  • (DO)/.09
  • (DISH)/.69
  • (L)/.66
  • (AMD)/-.04
  • (AGU)/-.07
  • (CGNX)/.28
  • (RCII)/-.02
  • (THC)/-.52
  • (VNO)/1.25
Economic Releases
8:30 am EST
  • Personal Income for March is estimated to rise +.3% versus a +.4% gain in February.  
  • Personal Spending for March is estimated to rise +.2% versus a +.1% gain in February.
  • The PCE Core MoM for March is estimated to fall -.1% versus a +.2% gain in February. 
10:00 am EST
  • ISM Manufacturing for April is estimated to fall to 56.5 versus 57.2 in March.
  • ISM Prices Paid for April.
  • Construction Spending MoM for March is estimated to rise +.4% versus a +.8% gain in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The BoJ Minutes and the (AXP) general meeting could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lowr and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

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