Wednesday, April 05, 2017

Thursday Watch

Evening Headlines
  • Stocks Fall in Asia After Fed Balance-Sheet Signal. Stocks retreated from Sydney to Seoul after a record of last month’s Federal Reserve meeting showed that officials favor shrinking the U.S. central bank’s balance sheet this year and that some judged equity prices to be "quite high." Shares in Japan, South Korea and Australia all fell after the S&P 500 Index declined. Treasury yields stayed lower amid speculation that balance-sheet reduction could reduce the need for interest-rate hikes, while the dollar headed for a fifth day of losses versus the yen. The yen rose 0.3 percent to 110.37 per dollar as of 9:17 a.m. in Tokyo, on course for a fifth day of gains. The Topix index slid 0.8 percent and Australia’s S&P/ASX 200 Index lost 0.3 percent. The South Korean Kospi index slid 0.5 percent. New Zealand’s S&P/NZX 50 Index fell 0.1 percent.
  • Your Evening Briefing.
  • Traders Bet the Fed Will Slow Rate Hikes to Shrink Balance Sheet. Most Federal Reserve officials agree that they will begin shrinking their super-sized balance sheet later this year. What they don’t want to discuss in detail yet is how that will shape their plans to continue raising the short-term interest rate in 2018. The minutes of the March meeting employed some key words to outline plans to trim the balance sheet, which ballooned to $4.5 trillion following three rounds of bond purchases. Reductions need to be “gradual and predictable,” and should be accomplished by “phasing out” of reinvestments, meaning the central bank wouldn’t abruptly stop repurchasing all debt instruments when they mature. Finally, policy makers indicated reductions would start “later this year,” although they didn’t provide details on amounts.
  • Report: Las Vegas Draws More Millennial, First-time Visitors.
Wall Street Journal:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -.25% to -.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 95.0 +.75 basis point
  • Asia Pacific Sovereign CDS Index 21.0 unch.
  • Bloomberg Emerging Markets Currency Index 71.81 -.03%.
  • S&P 500 futures -.18%. 
  • NASDAQ 100 futures -.21%.
Morning Preview Links

Earnings of Note

  • (KMX)/.79
  • (STZ)/1.36
  • (FRED)/-.16
  • (SCHN)/.37
  • (PSMT)/.89
  • (WDFC)/.90
Economic Releases
7:30 am EST 
  • Challenger Job Cuts YoY for March. 
8:30 am EST
  • Initial Jobless Claims for last week are estimated to fall to 250K versus 258K the prior week.
  • Continuing Claims are estimated to fall to 2030K versus 2052K prior.   
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The President Trump/President Xi meeting, China Services PMI report, weekly Bloomberg Consumer Comfort Index, (SKYW) monthly traffic report, (LB)/(BKE)/(CATO)/(FRED) month sales reports and the (ANGO) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are lower, weighed down by technology 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 day.

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