Wednesday, July 05, 2017

Thursday Watch

Evening Headlines
Bloomberg:
  • China Bond Defaults Work Wonders in Introducing Pricing for RiskJust as global investors get a new channel to access China’s $9.8 trillion onshore bond market, it’s starting to look like one that they might recognize. Gone are the days when China’s corporate debt was all pretty much priced the same, with an implicit government backstop giving buyers little reason to demand higher returns from some borrowers over others. Things started changing in 2014, when the Communist Party leadership with little warning began to allow defaults. With a steady rise in delinquencies, investors are now distinguishing among issuers based on perceived credit quality.
  • Battle for 261 Million Wallets Grips China's Online Shopping Giants. To foretell where JD.com Inc. is going to expand in Indonesia, follow the cell phone towers. Wider mobile coverage means more consumers starting to shop online, so the Chinese e-commerce company tracks their construction to decide where to market its web store and set up delivery centers. JD has four warehouses in the archipelago, with plans to build another three by the end of the year. Staffing has almost tripled to about 400 people in the past 12 months. Within five years, the Beijing-based company plans to have refrigerated trucks delivering fresh food and frozen goods to homes.
  • Asia Stocks Face Mixed Start as Fed Minutes Parsed. Stocks in Asia are headed for a mixed start as investors digested details from the Federal Reserve’s most recent meeting. Equity index futures in Japan and Hong Kong were flat, while contracts signaled gains for Australian shares. The S&P 500 Index posted small gains and technology shares boosted the Nasdaq 100. Oil recovered some losses after slumping toward $45 a barrel, snapping eight days of gains. Futures on the Nikkei 225 Stock Average were flat in Singapore trading. Contracts on Australia’s S&P/ASX 200 Index rose 0.4 percent.
Wall Street Journal:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 87.75 -.5 basis point. 
  • Asia Pacific Sovereign CDS Index 22.25 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 72.37 -.04%.
  • S&P 500 futures -.05%.
  • NASDAQ 100 futures -.27%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (AZZ)/.69
Economic Releases 
7:30 am EST
  • Challenger Job Cuts YoY for June.
8:15 am EST
  • The ADP Employment Change for June is estimated to fall to 185K versus 253K in May. 
8:30 am EST
  • Initial Jobless Claims for last week are estimated at 244K versus 244K the prior week.
  • Continuing Claims are estimated to fall to 1940K versus 1948K prior.
  • The Trade Balance for May is estimated at -$46.3B versus -$47.6B in April.
10:00 am EST
  • ISM Non-Manufacturing for June is estimated to fall to 56.5 versus 56.9 in May.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,766,670 barrels versus a +118,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,588,890 barrels versus a -894,000 barrel decline the prior week. Distillate supplies are estimated to fall by -118,330 barrels versus a -223,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.63% versus a -1.5% decline prior.
Upcoming Splits
  • (MRTN) 5-for-3
Other Potential Market Movers
  • The Fed's Fischer speaking, Fed's Williams speaking, Fed's Powell speaking, Eurozone Factory Orders report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (LB)/(FRED)/(BKE)/(CATO) June sales reports,  could also impact trading today.
BOTTOM LINE:  Asian indices are slightly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

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